Tuesday, 14th November, 2017

Tesco/Booker merger likely to go ahead as CMA provisionally greenlight deal

The Competition and Markets Authority (CMA), Britain’s competition regulator, has given ‘provisional approval’ to Tesco as they rule the proposed £3.7bn takeover of Booker ‘does not raise competition concerns’.

In May of this year the CMA began its investigation into the merger, after concerns were raised from the rest of the wholesale industry who said that the merger would give Tesco ‘uncontestable power’. 

However as Tesco is primarily a grocery retailer and Booker is primarily a grocery wholesaler the CMA have ruled there ‘is very little direct, head-to-head competition between them.’ The Merger is therefore primarily vertical in nature.

The CMA examined 12,000 locations where a branch of Tesco competes with a Booker-supplied shop and concluded competition was sufficient to prevent prices from going up.

They provisionally found that the merged entity is likely to benefit from better terms from some suppliers with regard to some products in wholesaling.

Simon Polito, chair of the CMA’s inquiry group, said: “Our investigation has found that existing competition is sufficiently strong in both the wholesale and retail grocery sectors to ensure that the merger between Tesco and Booker will not lead to higher prices or a reduced service for supermarket and convenience shoppers.”

The CMA will make its final decision by the end of December.